Leasing instead of buying has become more popular lately because of rising car loan rates. Edmunds.com says car leases were up 21 percent last year.
The choice between car buying and leasing is based on more than money as experts at CNNMoney point out, “… (leasing) isn't just a dollars-and-cents decision. It depends on the intangible importance you give to owning a new car. If the image of driving the latest model is essential to you, then you'll justify spending more money for this privilege. If you look at a car as merely transportation, then owning the newest car on the block will be lower on your priority list.”
Just remember, if you like the car and want to buy it after the lease expires, it will cost you more than if you bought the car at the start and paid off the loan. Plus, if you own the car, you should have years of relatively low-cost driving long after the loan is retired.
According to The U.S. Department of Transportation, the average life span of a vehicle is 13 years, with final mileage around 145,000 miles. Half of all vehicles on the road today are at least eight years old.
Say you buy a new car and drive it 14,000 miles a year (the national average). By the time you pay off a four-year loan, the vehicle should have around 56,000 miles on it. You should have, on average, another six years and 84,000 miles of reliable transportation.
Leasing Advantages: You are always driving a new car, which means the latest safety features. You have a lower down payment than if you bought the car, provided you have good credit. You will also have lower monthly payments than if you were making payments on a 36-month loan. And, there will be little or no maintenance costs because the car will be under warranty.
Leasing Drawbacks: You always have a car payment. Leasing usually applies only to new, more expensive vehicles. When you turn in the car you have nothing to show for your money. And keep in mind there are stiff penalties for terminating the lease early.
Car Buying Loan Quote: Learn more aboutCar Buying Versus Leasing and get a complimentary loan quote at Auto Loans In Seconds.
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